Humana 2002 Annual Report Download - page 76

Download and view the complete annual report

Please find page 76 of the 2002 Humana annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other Borrowings
Other borrowings of $5.5 million at December 31, 2002 represent financing for the renovation of a building,
bear interest at 2% and are payable in various installments through 2014.
Shelf Registration
On October 8, 2002, we filed a universal shelf registration with the SEC to register debt or equity securities,
from time to time, up to a total of $600 million, with the amount, price and terms to be determined at the time of
the sale. Once it becomes effective, we will have the ability to use the net proceeds from any future sales of our
securities for our operations and for other general corporate purposes, including repayment or refinancing of
borrowings, working capital, capital expenditures, investments, acquisitions, or the repurchase of our outstanding
securities.
8. PROFESSIONAL LIABILITY RISKS
Activity in the reserve for professional liability risks is summarized as follows:
For the year ended December 31,
2002 2001 2000
(in thousands)
Gross reserve at January 1 ............................... $301,518 $ 297,699 $ 289,035
Less recoverables from insurance ..................... (186,973) (170,774) (162,271)
Net reserve at January 1 ................................. 114,545 126,925 126,764
Incurred related to:
Current year ...................................... 39,332 24,819 26,374
Prior years ....................................... (15,868) (12,550) (4,574)
Total incurred ......................................... 23,464 12,269 21,800
Paid related to:
Current year ...................................... (659) (654) (1,107)
Prior years ....................................... (17,182) (23,995) (20,532)
Totalpaid ............................................ (17,841) (24,649) (21,639)
Net reserve at December 31 .............................. 120,168 114,545 126,925
Plus recoverables from insurance ...................... 142,595 186,973 170,774
Gross reserve at December 31 ............................ $262,763 $ 301,518 $ 297,699
Changes in estimates of incurred claims for prior years recognized in each of the years ended December 31,
2002, 2001 and 2000 were attributable to favorable loss development, primarily related to medical malpractice
exposures. Beginning January 1, 2002, we reduced the amount of coverage purchased from third party insurance
carriers, causing an increase in the net reserve for professional liability risks. The total cost associated with our
professional liabilities, including the cost of purchasing insurance coverage from a number of third party
insurance companies, totaled $33.6 million in 2002, $31.4 million in 2001 and $33.0 million in 2000.
70